Immigration and ‘labour market tests’: Who should be protected against whom?

The great majority of labour immigration programmes (and almost all temporarylabour migration programmes) in high-income countries operate “labour market tests”, which aim to ensure that employers recruit migrant workers only after having made every reasonable effort to recruit “local workers”. Labour market tests usually require employers to advertise their vacancies for a minimum period of time before applying for a work permit for a migrant worker. For example, the UK’s “resident labour market test” for employing non-EU workers is explained here (pages 83-91) and Ireland’s version is here.

One big problem with labour market tests around the world (including the UK) is that they mostly fail to protect local workers. Part of the problem is that many employers, especially but not only in lower-skilled occupations, prefer to recruit migrant workers (sometimes because they are better skilled, see here). Many of the employers I have spoken to around the world consider labour market tests a “waste of time and money” as they do not expect to find any local workers for the jobs they are trying to fill. But the common failure of labour market tests is a topic for another blog (in fact, it is a paper – see ch. 4 in this new book)

In this blog post, I want to raise – without answering – a more basic question. Labour market tests can be thought of as policies that aim to provide “local workers” with preferential access to the national labour market when admitting migrant workers. The underlying idea is that there is a ‘preferred group’ of local workers who have the opportunity to access (ie apply for, accept, or reject) a job in the national labour market before workers who are not in the preferred group.

So the basic question is: who should be included in this preferred and protected group of “local workers”? Who should be granted preferential access to the national labour market over whom? In theory, a whole range of criteria could be used to make this decision. In practice, the most commonly used criteria have been citizenship, residence status, and the characteristics of the job under consideration.

Citizenship and residence status

The narrowest definition of “local workers” includes citizens only. A more expanded definition, which is probably most common among high-income countries, also includes long-term residents, ie those with permanent residence status. Canada’s temporary migration programmes are an example. A yet wider definition, to the best of my knowledge not used by any country at the moment, would also include some shorter-term residents, such as migrant workers admitted on temporary work permits.

In some cases, countries may also extend preferential access to the national labour market to citizens of other countries that are part of a common supra-national agreement and legal framework, as is the case with the European Union. The EU’s ‘community preference’ principle stipulates that EU countries can only admit non-EU workers if no suitable workers from the European Economic Area (the “EEA”, which includes the EU plus Iceland, Liechtenstein and Norway) can be found to fill the vacancy. In other words, in EU countries’ labour immigration policies, labour market tests must protect all EEA workers vis-à-vis non-EEA workers.

“Global jobs”

In addition to using citizenship and/or residence status, some countries explicitly exclude certain jobs from the ‘protected labour market’ where ‘local workers’—however defined—enjoy preferential access. Employers looking for workers to fill these jobs – which are sometimes referred to as ‘global jobs’ – are not required to give preference to local workers. Instead, employers are free to recruit the most suitable workers from the global labour market.

In practice, these global jobs typically include the most high-paid jobs for highly skilled workers. For example, in the UK, employers looking for workers for jobs paying more than £153,500 per year are not required to meet the requirements of a resident labour market test. Employers offering jobs that pay more than £71,600 per year face fewer requirements than those paying less (see pages 84-86 here). Global jobs sometimes also include lower-paid occupations in the arts, e.g. ballet dancers and musicians.

The exemption of “global jobs” from the labour market test requirement is typically justified by the alleged need for certain companies to access directly the ‘best and most highly skilled workers’ (or the best artists) in the world in order to remain “globally competitive”.

There is clearly some logic to this argument. But it does immediately raise a basic question: where should we draw the line that divides the “protected” from the “unprotected” national labour market?

Fileting frozen mackerel

What should be the annual pay threshold above which local workers are denied preferential access to jobs? More generally, does the argument that “we need to recruit from the global labour market to remain globally competitive” really only apply to higher-skilled jobs? Should “global jobs” go beyond highly skilled and/or highly paid jobs and also include lower-skilled jobs? Why do GoldmanSachs and PricewaterhouseCoopers face a global labour market when they are looking for well-paid lawyers or investment bankers, while a food processing factory looking for the “best workers” to manually fillet mackerel from frozen must first try to fill the job with local workers?

My example of fileting mackerel is not random. A few years ago I spoke to the owner of a fish processing factory that was exporting mackerel to the Japanese market which, the owner told me, has very exacting specifications requiring specialist processing skills. To stay competitive in this global market, his company thus needed the best manual filetters of mackerel in the world, not just the best workers in the UK or the EU. In short, he was arguing that his company needed migrant workers to stay “globally competitive” ….

There may well be good reasons why the “global competitiveness argument” is more credible when it comes to higher-skilled jobs – but the basic question still remains: who should be protected by labour market tests, and why?